Mills in India showed limited interest in imported ferrous scrap buying amid a fall in domestic steel and ferrous scrap prices. Indian steel prices declined by over Rs1,000/mt ($13.5/mt) following a correction in Chinese iron ore import prices. Market participants expect iron ore miners to reduce prices to match the global trend, thus sentiments remained negative.
Contrary to previous estimates, the potential September price hike might not offset the decline, but demand could witness a gradual recovery, believe experts. Trade activities in the Indian market could increase as monsoon recedes and production rates improve over the next two months.
The daily Davis Index for containerized shredded, Monday, dropped by $5/mt to $526.25/mt cfr Nhava Sheva. Indian mills remained reluctant to buy imported ferrous scrap priced above $500/mt cfr Nhava Sheva and focused mainly on HMS trades. There was hardly any interest for shredded even from regular alloy makers despite low inventories on Monday. Bids for containerised ferrous scrap were below $10/mt than seller-expectations as Turkish mills limited their bulk ferrous scrap purchases.
The daily Davis Index for UAE-origin HMS 1&2 (80:20) declined further by $5/mt to $473/mt cfr Nhava Sheva due to weak domestic sentiments on Monday as compared to last Friday.
Buyers were scarce for UAE-origin #1 HMS priced above $480/mt cfr Nhava Sheva on Monday, as offers remained unattractive. Domestic scrap prices dropped over Rs1,000/mt and a decline in sponge iron prices led to increased use of the product.
Domestic melting scrap prices in Alang dropped on Monday, as yards continued to liquidate piled up inventories. Melting scrap declined by Rs1,200/mt and traded at Rs34,800/mt ex-Alang as trades resumed. In Mumbai, the asking prices for rebar softened by over Rs1,000/mt from the peak, last week and was at Rs49,500/mt ex-works.
In Mandi Gobindgarh, ingots traded at Rs44,800/mt ex-works on Monday, falling by Rs1,000/mt from Friday. Demand for rebar remained low in North India. In Chennai, mills preferred domestic scrap and trades for imported scrap remained scarce.
Chinese steel prices recovered by CNY100/mt on Monday as coking coal and ferro-alloy futures jumped. Low coke inventories and tensions with Australia, boosted prices. Several vessels are lined up and congestions at ports further increased bulk freight. Market recovery in China and Southeast Asia could take longer as sentiments remained weak.
After a sharp drop, international iron ore prices rebounded to reach above $140/dmt cfr China on Monday for Fe 62pc spot sales. The daily domestic billet price in China on Monday recovered by CNY30/mt to CNY4,910/mt ex-Tangshan inclusive of VAT. Bids for imported billet were still below $660/mt cfr China resulting in a decline in Indian export offers on fob basis.
Subcontinent
The daily Davis Index for containerized shredded on Monday, settled at $529.75/mt cfr Indian subcontinent, down by $7.25/mt; while that for containerized US-origin HMS 1&2 (80:20) settled at $488.93/mt cfr Indian subcontinent, down by $3.95/mt. A decline in global ferrous scrap prices cast a shadow on South Asian markets.
According to freight data with Davis Index, normalized weekly container freight rates on the New York to South Asia route inched up on Friday. Freight for shipments to Bangladesh rose to $90.3/mt, up $2.19/mt. While those for Pakistan and India remained unchanged at $51.74/mt, and $47.01/mt, respectively.
($1=Rs74.20; CNY6.48)